TL;DR: All trades that do not directly involve a FIAT currency must be converted into FIAT at the time of the transaction. CoinTracking offers multiple conversion methods to determine how this conversion is performed. These methods define which part of a trade pair is used to calculate cost basis and proceeds.
What is the conversion method?
The conversion method defines how trades without direct FIAT involvement (e.g. BTC/ETH, ETH/BTC, BTC/USDT) are converted into your FIAT currency.
This conversion is required to correctly calculate gains, losses, and taxes.
CoinTracking applies defined rules to determine which side of a trade pair is used as the basis for FIAT valuation.
Why is conversion necessary?
All tax-relevant calculations are based on FIAT values.
If a trade does not occur directly against a FIAT currency such as EUR or USD, the FIAT equivalent at the time of the transaction must be determined in order to:
correctly establish the cost basis
realistically calculate proceeds
properly report taxable gains and losses
Which priority order is used?
For certain methods, CoinTracking applies a fixed priority logic:
FIAT currencies (USD, EUR, GBP, …)
Stablecoins (USDC, USDT, DAI, …)
Other cryptocurrencies and commodities (ranked by market capitalization)
Which conversion methods are available?
Best Price
This method always selects the highest-priority asset in the trade pair and converts it into FIAT. The resulting value is used for both cost basis and proceeds.
Example – Buying 1 BTC for 3,000 USD
FIAT currency: USD
Trade pair: BTC / USD
USD is a FIAT currency and has the highest priority.
Cost basis: 3,000 USD
Example – Buying 60 ETH for 1 BTC
FIAT currency: USD
Trade pair: ETH / BTC
BTC has a higher market capitalization than ETH.
BTC is converted into USD at the transaction time and used as the cost basis.
Example – Buying 1 BTC for 50,000 USDC
FIAT currency: USD
Trade pair: BTC / USDC
USDC is a stablecoin and has higher priority than BTC.
USDC is converted 1:1 into USD.
Cost basis: 50,000 USD
Transaction Prices
This method always converts the first asset in the trade pair into FIAT and uses it as the cost basis.
Example – Buying 60 ETH for 1 BTC
ETH (the first asset in the pair) is converted into USD at the transaction time.
Cost basis: USD value of 60 ETH
This method ignores priority rules and relies solely on the order of the trade pair.
Counterpart Prices
This method always converts the second asset in the trade pair into FIAT.
Example – Buying 60 ETH for 1 BTC
BTC (the second asset in the pair) is converted into USD.
Cost basis: USD value of 1 BTC
Purchase Prices
This method always converts the purchased asset into FIAT and uses it as the cost basis.
Example – Buying 60 ETH for 1 BTC
ETH is converted into USD at the transaction time.
Cost basis: USD value of 60 ETH
Sale Prices
This method always converts the sold asset into FIAT.
Example – Buying 60 ETH for 1 BTC
BTC is converted into USD at the transaction time.
Cost basis: USD value of 1 BTC
DE Counterpart Prices
Due to its higher complexity, this method is explained in a separate FAQ.
Why is “Best Price” the recommended method?
Methods such as Counterpart Prices always use the same fixed side of a trade pair for conversion. This can become problematic if one of the assets:
is very small or illiquid
has low trading volume
has distorted or incorrect price data
is traded on unreliable exchanges
In such cases, unrealistic FIAT values can occur.
Example:
1 ETH is sold for 100 QQQ.
Realistic market value of ETH: 1,000 USD
Average price of QQQ: 2,000 USD due to distorted market data
With Best Price, the ETH value of 1,000 USD is used.
With Counterpart Prices, the QQQ value of 2,000 USD is used.
If ETH was originally purchased for 900 USD:
Real economic gain: 100 USD
Counterpart method gain: 1,100 USD (taxed), even though it does not economically exist
The reverse can also occur, creating artificial losses.
What are the risks of other methods?
For many trades with spreads above 20% (visible on the Trade Prices page), methods other than Best Price often result in:
distorted cost bases
unrealistic proceeds
tax values that are difficult to justify
While these values may be mathematically correct, they can trigger questions or audits by tax authorities because the applied prices are not economically plausible.
Summary
The conversion method defines how non-FIAT trades are valued in FIAT.
It directly affects cost basis, proceeds, gains, and losses.
Best Price always uses the economically most reasonable side of a trade pair
This significantly reduces the risk of unrealistic values.